Stran & Company (asi/337725), a publicly traded Top 40 promotional products distributor, increased sales nearly 29% year over year to $15.8 million in the first quarter of 2023, according to financial data released Monday, May 15.

Still, profitability eluded the Quincy, MA-headquartered firm as a host of expenses weighed on earnings, leading to a quarterly loss of $694,538, or -$0.04 per share.

Andy Shape, Stran

Executives said the loss resulted from increased costs related to lead generation, integration expenses tied to acquisitions, higher purchase prices, and money put into implementing an enterprise resource planning system on NetSuite’s ERP platform. Ongoing costs with being a public company – something Stran became in late 2021 – also contributed to the loss.

Meanwhile, the topline revenue gain resulted, in part, from higher spending from existing clients and the addition of new customers – something evidenced by 17.7% year-over-year organic sales growth in Q1, Stran reported. The company also accelerated business thanks to revenue generated from the three distributorships it acquired in 2022.

Stran’s quarterly sales increase outpaced the industry average for the first quarter. The Distributor Quarterly Sales Survey from ASI Research shows that, collectively, distributor sales rose 3.3% in Q1 – a number helped along by inflation.

Distributor Sales Cool in Q1 Amid Recession Concerns https://t.co/Ujvkml6kZM

— Chris Ruvo (@ChrisR_ASI) May 15, 2023

Beyond sales increasing, company executives said there were other positives to report from the quarter.

Stran has been effectively onboarding acquired distributors Premier Business Services, Trend Brand Solutions (asi/346428) and G.A.P. Promotions (asi/199882). It’s also working to seal the deal on a planned acquisition of another distributorship, T.R. Miller Co. Inc. (asi/272250). Announced in January 2023, the T.R. Miller acquisition is expected to close in the second quarter of 2023.

More company-buying could be in the cards for Stran.

“We have preserved a solid balance sheet with more than $10 million in cash, $5 million in short-term treasuries, and $5 million in AAA-rated corporate bonds and diversified mutual funds, which allows us to pursue additional growth initiatives, including accretive acquisitions,” said Stran CEO Andy Shape, a member of Counselor’s Power 50 list of promo’s most influential people.

Shape said Stran has scored some recent wins about which the firm is excited.

“We are witnessing strong contract momentum as a result of our marketing initiatives and signed a contract with a multinational direct-selling beauty product company during the quarter where we are providing incentive merchandise to bolster their loyalty program,” Shape said. “We are currently in the process of launching their e-commerce store, which will provide easy access to products for their more than 4 million influencers.”

For the full year of 2022, Stran engineered a double-digit annual revenue increase, though for the year the firm experienced a loss of $788,441, or -$0.04 per share, amid a number of factors that offset the strong sales.

Based on reported 2021 North American promotional product revenue of $47.3 million, Stran & Company ranked 34^th on Counselor’s most recent list of the largest distributors in the industry. The new rankings are due out in the summer.